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Aid sustains the budget.

Minister of Finance Eneas Comiche announced Mozambique's 1994 budget in December before the Assembly of the Republic in Maputo.

The greater part of the budget, approximately 56%, is being placed into the nation's coffers in the form of donations or credits from the international donor community.

Total spending

Total public expenditure is envisaged at 2,514bn meticais (officially valued at $464m). This breaks down into MM1,303bn for the current budget and MM1,211bn in the investment budget.

But revenue from taxes, customs duties and other domestic sources is budgeted at only MM1,107bn ($205m).

In effect, foreign grants and loans are financing the entire investment budget plus 15% of current public expenditure, a report by the Mozambique News Agency (AIM) acknowledges.

Much the same proportions prevailed in 1993, with locally raised revenue representing only 45% of expenditure and the remaining 55% covered by the international community.

Projected expenditure is 11% higher than the 1993 figure of MM2,264bn, of which MM1,164bn was for the current budget and MM1,100bn was in the investment budget. But revenue projections show an increase of only 7%; revenue in 1993 totalled MM1,034bn.

Revenue sources

Of the MM1,107bn which the government expects to collect in 1994, fully half will come from indirect taxes on goods and services, and almost a third will come from customs duties. Just over 10% is to derive from income tax, and miscellaneous other taxes and non-fiscal revenue are to make up the rest of the government's income.

Even though the long-running civil war has come to an end, the largest single item of current expenditure is defence and security, which account for MM350bn or 27% of the total. At first sight, this is a significant decline on the 33% of the 1993 current budget that was spent on defence. However, certain military-related items - demobilisation and the formation of the new, unified armed forces - are given separate fines in the budget. When they are included, military expenditure totals MM453bn, almost 35% of the total outlay.

Goods and services represent the second-largest budgetary item, after the military, accounting for MM268bn (20.6%), followed by the payroll for civilian employees in the state apparatus (19.2%) and debt servicing (16.9%). Taken together, defence-related spending plus debt servicing account for about 52% of current public expenditure. This represents a slight decline on 1993, when they accounted for 54%.

Comiche expressed optimism that the economy will continue to grow in 1994. From 1990 to 1992, the economy contracted, and in 1992 there was a 2.4% drop in production. But this trend was reversed in 1993, and Comiche estimates that the Mozambican economy grew by 5.6% in that year.

He predicted that the economy will grow by about the same amount in 1994.

Inflation, which according to government assessments stood at 55% in December 1992, is now down to about 30%, Minister Comiche indicated. The government forecasts that inflation is to fall to below 18% by December 1994.

Comiche warned, however, that the "positive results" of 1993 were achieved thanks to "restrictive monetary and fiscal policies", which means "rigorous control over public expenditure".

For the coming year, Comiche called for "criteria of assessment and selection in the state apparatus that would hold down the number of civil servants and ensure that this workforce is more efficient and better qualified".

Virtually identical calls have been made in previous budgets for the past five years. He also pointed out that, with the end of the war, poverty-alleviation programmes are to switch their focus from the cities to the countryside. Resources that used to support extremely poor families in the towns are to be transferred to the rural areas in order to persuade these people to move to the countryside and grow their own food.

Following Minister Comiche's outline, Francisco Masquil, the Governor of Sofala province, immediately made a strong plea for decentralisation as an element in national reconciliation, with the provinces and districts being allowed to spend for themselves more of the money they raise in taxes.

Masquil indicated that just as the provinces view the central authorities with distrust, so the districts are distrustful of provincial capitals. In Sofala, he said, he has tried to overcome this tendency by strengthening the district administrations with qualified staff transferred from Beira and by channelling more than 70% of the province's 1993 budget to district initiatives. Results have been "excellent", he maintained, with low-cost construction, using spare local resources and capacities.

More controversial is Masquil's support for the openly sectarian plan to create a Catholic university in northern and central Mozambique. The rector of Maputo's Eduardo Mondlane University, Narciso Matos, praised Masquil's forthright defence of a decentralised budget and added his own demands for a gradual reduction in the amount spent on defence and security and an increase in social expenditure. Taking his own institution as an example of how little social sectors are granted from the national budget, Matos maintained that once all the unavoidable costs are paid, the university is left with MM100,000 (the princely sum of $20) per student per month to cover books, equipment, paper and other consumables. One of the country's other educational bodies, the Higher Pedagogical Institute, is in even worse financial straits, according to Matos. With its current budget, it is unable to open new courses or even to admit new students for the existing ones. Matos calls for the government to take seriously its own calls for cutting staff in the state apparatus.

Former Education Minister Graca Machel urged the assembly to tell Mozambicans, "You must work. You must produce food." Machel called for a change of mentality, away from petty trading and towards production. "We must become a nation of producers again," she declared.

Mozambique's election budget is deeply in the red

THE COST OF holding the elections that are scheduled to take place in October 1994 in Mozambique is projected at $76m, Justice Minister Ali Dauto told the Assembly of the Republic in December when he presented the chamber with the government's Election Bill.

The government itself, he declared, is unable to contribute more than $4m towards the exercise. Foreign donors have promised about 50% of what is required, but the electoral budget is currently facing a massive deficit.

Given Mozambique's extreme poverty, with per-capita income at less than $80 a year and the level of external aid nearly 70% of gross national product (GNP), Dauto called for greater international commitment to the country's first multiparty elections. Using projections from a "minicensus" carried out in 1993, Dauto estimates the number of people who will be eligible to vote in the elections at 8.55m.

The Election Bill proposes that presidential and legislative elections be held simultaneously over a two-day period, so as to ensure the greatest possible voter participation.

Meanwhile, Dauto has urged the Governors of the country's 11 provinces to waste no time in appointing personnel to the various electoral bodies that are to function at provincial and district level. During a meeting held in December, Dauto called for each Governor to appoint three experienced and competent people to serve on the Provincial Electoral Commissions, one of whom is to act as the Chairperson.

Provincial appointments

The Governors are also to appoint three people, including the Chairperson, to each District Election Commission. Two members of each provincial and district commission will be appointed by Renamo, one by every other registered political party and one by Onumoz, the UN team which is overseeing Mozambique's transition from civil war to free and fair multiparty elections.

Election Technical Secretariats are also to be appointed in the provinces and in the districts.

At provincial level, these offices are to consist of 13 members, comprising six technical staff including the Director to be appointed by the government, three to be appointed by Renamo, two to be appointed by the other political parties and two to be appointed by Onumoz.

In the districts, the Secretariats are to consist of seven members, comprising two people to be appoint by the government, two to be appointed by Renamo, two to be appointed by the other political parties and one to be appointed by Onumoz.

Mozambique's emergency food requirement declines

THE MOZAMBICAN government estimates the country's emergency needs for the 1994/95 crop year at about $221m, less than half the figure for 1993/94, according to the Mozambique News Agency (AIM).

In a document entitled Strategy for the Transition from Emergency to Reconstruction: Priority needs for 1994/95, prepared with the assistance of the UN, the government recognises that the main factor that plunged Mozambique into an emergency situation was the war. It adds that while the war is over, it would be premature to declare an end to the emergency.

The preliminary estimate of relief food-aid needs for 1994/95 is 119,340 tonnes for between 500,000 and 800,000 people.

Who is eligible

In principle, only returning refugees and internally displaced people qualify for freely distributed food aid. The government has expressed its concern that this food aid should not undermine domestic food production.

The document urges donors to purchase foodstuffs, particularly maize and beans, inside Mozambique as far as is possible, "in order to support the rural economy and to help reduce the negative impact of external aid on weak and fragmented market systems in the rural areas and on agricultural production in the process of recovery". Two of the major donors, the UN World Food Programme (WFP) and the European Community, are already buying surplus crops from Mozambican peasant farmers for use as relief aid.

As usual, Mozambique will also require substantial market food aid. In 1994/95, an estimated 5.8m people are expected to buy their food through the normal commercial network. They will need about 617,000 tonnes of grain, of which slightly less than half is to be sourced from local production and commercial imports. That will leave about 313,000t of grain for the market to be provided by donors.

These estimates are tentative, the AIM cautions, and they are subject to revision after the WFP and the UN Food & Agriculture Organisation (FAO) jointly assess the crop situation in April 1994. When therapeutic feeding and hospital diets are added, the total food-aid estimates for 1994/95 stand at 455,690t, costed at $73.6m.

This is a sharp reduction when compared with the 1993/94 figure of 749,500t, costed at $119.6m. The logistical costs of moving emergency food aid in 1994/95 are projected at $32.6m.

Donors are urged to meet the full cost for internal transport, storage and handling, as well as to provide airlifts for isolated areas. The opening of roads following the end of the war has reduced the number of places requiring airlifts from 15 to just three, as of the time of writing.

The number may rise during the rainy season, however, as roads become impassable. The document estimates that 5,000t of food will be airlifted at a cost of $700 a tonne.

Key to full recovery is the supply of inputs for peasant agriculture. Donors are requested to provide $33.7m to supply 15,300t of seeds and 4.8m hand tools to about 515,000 peasant families.

This figure includes displaced people, returning refugees and demobilised government and Renamo soldiers. Other components of the emergency programme for 1994/95 include the supply of clean water in rural areas at a cost of $14.2m, the repair of roads and bridges at a cost of $18.7m, the rehabilitation of the rural health network including measures to control epidemics at a cost of $8.7m, the restoration of the school network in the countryside at a cost of $9.9m and the provision of "relief and survival items" such as soap, clothing and blankets at a cost of $7m. The government is specifically asking donors to avoid flooding the Mozambican market with second-hand European clothing and instead to purchase locally produced clothes, blankets and utensils - even where this may prove to be more expensive than importing them. Phasing out food aid

The document stresses that the government wants to phase out food aid and other emergency assistance. For this to be achieved, the peasant-farming sector must be supported and must be given incentives to produce surplus crops. In addition, rural marketing networks must be revived.

This is one of the documents that went before the December meeting in Paris of the World Bank Consultative Group for Mozambique. That meeting discussed the country's entire financial needs for 1994, of which emergency aid forms a relatively small part.

A draft World Bank document from early November puts the total financing required at $1.4bn. This is by no means all donations or soft loans - it includes $405m of debt relief.

The World Bank, on the other hand, puts the donation and credits required for 1994 at $943.4m.

A gap of $464.9m - half again as much as the World Bank figure - therefore exists between what Mozambique is requesting and what the Bank reckons would be sufficient to meet Mozambique's needs.

The World Bank figure includes import support, emergency aid and the various programmes flowing from the 1992 peace agreement, including the demobilisation of government and Renamo forces and the organisation of the general elections that are scheduled for October 1994.

Trade unionists blame ERP for low standard of living

MOZAMBIQUE'S trade-union federation, the OTM, has warned that workers will not support the structural-adjustment programme (ERP) if the result is a continual decline in their standard of living.

The OTM has called for a strong social component to moderate the effects of the policy, embraced by the government, the IMF and the World Bank.

They are pressing for a minimum wage to be pegged to the price of a basket of basic foodstuffs. They have calculated that the minimum monthly wage of MM70,600 (about $14) is insufficient for the basic survival needs of any family. They made their assumption based on a monthly diet of 9 kg of maize flour, 1.5 kg of rice, 1.5 kg of sugar, 1.5 kg of beans, 2 kg of low-grade fish, 4.5 kg of fruits and vegetables and 1.5 litres of vegetable oil. For an average-sized Maputo family of five persons, this diet would require MM255,350 - which is what the OTM has suggested the minimum wage should be. The basket would cost considerably more if the OTM had included components for rent, transport, medical care and education.

OTM General Secretary Soares Nhaca proclaims that the labour movement regards the current wage differentials as unjust.
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Title Annotation:includes related articles; Mozambique
Publication:African Business
Date:Feb 1, 1994
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